INTERVIEW-West Siberia can produce steady oil until 2020

KHANTY-MANSIYSK, Russia, March 13 Thu Mar 13, 2008 4:13pm GMT

KHANTY-MANSIYSK, Russia, March 13 (Reuters) - Russia's oil Eldorado in West Siberia is nowhere near depletion, despite some pessimism from analysts, and there are enough reserves for steady output through 2020, a regional governor told Reuters.

Oil output in Russia's resource-rich Khanty Mansiysk Autonomous District, a large stretch of western Siberia, will have daily output of around 5.6 million barrels per day, around three-fifths of Russia's current total, throughout the next decade, the district's governor Alexander Filipenko said.

That means Russia is in no mood to cede its spot as the world's second-largest oil exporter at a time of record high global prices, although Filipenko believes economic diversification is task number one for his frozen Siberian outpost.

"We should produce somewhere in the area of 280 million tonnes of oil (per year or 5.6 million bpd), and maybe grow a little through 2010 if we actively start stimulating further oil production, so that by 2020 we will have two development scenarios," Filipenko told Reuters.

Russian oil output has been stagnant over the last year after big spikes earlier this decade. Analysts say West Siberian reserves, which have been producing since the early 1970s, are facing depletion.

Major oil projects in East Siberia, which may potentially replace West Siberia as Russia's core production region, are being delayed due to high capital costs and oil firms' complaints that the government is taxing away all the profits.

Filipenko predicted two depletion scenarios after 2020, one foreseeing an oil production drop to 220-230 tonnes annually, the other a decline to a more modest 260-270. Neither case, the governor said, was likely to affect income to the region.

MAIN GOAL

"If we take into consideration that oil has a tendency for price growth, then for the territory that does not figure critically," Filipenko said.

"Our main goal for today is to transform the economic structure in such a way that we can lessen our dependence on just the oil business," he added.

The comment echoes the standard line of President Vladimir Putin who has repeatedly called for the diversification of the Russian economy.

Last month, Putin, who will leave office in May, named economic diversification, pension reform and better governance among the top priorities of his successor Dmitry Medvedev. Putin will stay on as prime minister under Medvedev.

Rising oil prices have made Russia's budget revenues 70 percent dependant on energy exports compared to 50 percent a few years ago.

Filipenko said the current non-oil sector in the Khanty Mansiysk Autonomous District, 2,700 kilometres (1600 miles) northeast of Moscow, accounts for about 10 percent of the region's gross domestic product.

"But that 10 percent today is about 270 billion roubles ($11.32 billion). What is that? That's approximately 4-5 times the average Russian gross regional product," he said.

Filipenko said power generation plants, lumber production and construction were all heavy contributors to Khanty Mansiysk's non-oil sector growth. (Additional reporting by Dmitry Zhdannikov; editing by James Jukwey)